Rule 123 of The General Financial Rules 2017 Inter Departmental Adjustments
Original Rule Text
Visual Summary
Generally do not charge other departments for core duties.
Ordinarily charge and are charged for supplies/services.
Exceptions apply if expressly provided by general or special orders.
Executive Summary
Rule 123 of The General Financial Rules, 2017, governs inter-departmental adjustments for services and supplies. It establishes a fundamental principle: Service Departments generally do not charge other departments for duties falling within their core functions, unless specific orders dictate otherwise. Conversely, Commercial Departments or undertakings are expected to charge and be charged for supplies and services provided to or received from other government departments, operating on a commercial basis.
In-Depth Analysis of the Rule
Rule 123 provides clarity on how financial transactions for services and supplies are to be handled between different government departments. This distinction is crucial for maintaining proper accounting, ensuring fairness, and promoting efficiency within the government’s financial management system.
Breakdown of the Rule:
- Service Departments: These departments, constituted for specific governmental duties, are generally prohibited from charging other departments for services rendered or supplies made that fall within their defined class of duties. This prevents internal billing for routine governmental functions.
- Commercial Departments or Undertakings: In contrast, departments or undertakings operating on a commercial basis are expected to charge for their supplies and services and, similarly, be charged by other departments. This ensures that their commercial operations reflect actual costs and revenues.
- Exceptions: The rule explicitly allows for exceptions if “expressly provided by any general or special orders.” This flexibility permits the government to adapt charging policies based on specific needs or circumstances.
Practical Example:
Consider a scenario where the Ministry of Health (a service department) provides medical advice to the Ministry of Education. Under Rule 123, the Ministry of Health would typically not charge the Ministry of Education for this service, as it falls within its core public health duties. However, if a government-owned printing press (a commercial undertaking) prints official documents for the Ministry of Finance, it would ordinarily charge the Ministry of Finance for the printing services, reflecting its commercial operational model.
Related Provisions
Understanding Rule 123 is enhanced by considering other related provisions in the General Financial Rules, 2017:
- Rule 124 of The General Financial Rules, 2017: Principles for Division of Departments for Purposes of Inter-Departmental Payments: This rule further elaborates on how departments are categorized for the purpose of inter-departmental payments, distinguishing between service and commercial departments.
- Rule 125 of The General Financial Rules, 2017: Period for Preferment of Claims: Specifies the timeframes within which claims between departments must ordinarily be preferred.
- Rule 126 of The General Financial Rules, 2017: Procedure for Settlement of Inter-Departmental Adjustments: Outlines the detailed procedures for settling adjustments between government departments.
Learning Aids
Mnemonics:
- S.C.O.P.E. – Service (No Charge), Commercial (Charge), Orders (Exceptions), Principles (Inter-Departmental), Explicitly Provided.
Process Flowchart:
Multiple Choice Questions (MCQs)
1. According to Rule 123 of the General Financial Rules, 2017, what is the general principle for a Service Department charging other Departments for services rendered within its class of duties?
- A) They must always charge.
- B) They shall not charge, unless expressly provided by special orders.
- C) They can charge if the service is complex.
- D) They can charge if the receiving department agrees.
Show Answer
Correct Answer: B) They shall not charge, unless expressly provided by special orders.
2. Under Rule 123 of the General Financial Rules, 2017, how should a Commercial Department or undertaking handle charges for supplies and services rendered to other government departments?
- A) They should never charge.
- B) They should only charge if the service department requests it.
- C) They shall ordinarily charge and be charged.
- D) They must obtain prior approval from the Ministry of Finance for every transaction.
Show Answer
Correct Answer: C) They shall ordinarily charge and be charged.
3. Rule 123 of the General Financial Rules, 2017, allows exceptions to its general principles regarding inter-departmental adjustments. What is the basis for such exceptions?
- A) Mutual agreement between the departments involved.
- B) Express provision by any general or special orders.
- C) Approval from the Head of the Department.
- D) The discretion of the Accounts Officer.
Show Answer
Correct Answer: B) Express provision by any general or special orders.
4. Which of the following best describes a “Service Department” as implied by Rule 123 of the General Financial Rules, 2017, in the context of inter-departmental charging?
- A) A department that primarily generates revenue for the government.
- B) A department constituted for specific governmental duties, generally not charging for core functions.
- C) A department that provides services to the public on a payment basis.
- D) A department that handles all financial transactions for other departments.
Show Answer
Correct Answer: B) A department constituted for specific governmental duties, generally not charging for core functions.
5. If a government-owned factory (a commercial undertaking) provides goods to a Service Department, what does Rule 123 of the General Financial Rules, 2017, stipulate regarding payment?
- A) The factory should provide the goods free of charge.
- B) The factory shall ordinarily charge the Service Department for the goods.
- C) The Service Department must obtain a special waiver to receive the goods for free.
- D) The transaction is outside the scope of inter-departmental adjustments.
Show Answer
Correct Answer: B) The factory shall ordinarily charge the Service Department for the goods.
Frequently Asked Questions (FAQs)
Q: What is the primary distinction Rule 123 of the General Financial Rules, 2017, makes between departments for inter-departmental charging?
A: Rule 123 distinguishes between ‘Service Departments’ and ‘Commercial Departments or undertakings’. Service Departments generally do not charge for core duties, while Commercial Departments ordinarily charge and are charged for services and supplies.
Q: Can a Service Department ever charge another department under Rule 123 of the General Financial Rules, 2017?
A: Yes, a Service Department can charge another department if it is “expressly provided by any general or special orders” that override the general principle.
Q: Why is it important for Commercial Departments to charge other government departments for their services, according to Rule 123 of the General Financial Rules, 2017?
A: It is important because Commercial Departments or undertakings are established to work to a financial result determined through accounts maintained on commercial principles. Charging for services ensures proper accounting of costs and revenues for their commercial operations.
Key Takeaways
- Service Departments generally do not charge other departments for services or supplies falling within their core duties.
- Commercial Departments or undertakings shall ordinarily charge and be charged for supplies and services rendered to, or by, other government departments.
- Exceptions to these principles are permissible only if expressly provided by general or special orders.
- This rule ensures clear financial accountability and operational distinctions between different types of government entities.
Conclusion
Rule 123 of The General Financial Rules, 2017, is a foundational principle for inter-departmental financial interactions. By clearly delineating when charges should or should not be levied, it promotes transparency, accountability, and efficient resource allocation across government entities, ensuring that financial management aligns with the operational nature of each department.